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The Economics of Donations and Enlightened Self-interest

Authors


  • We are very grateful to the English National Opera for providing us with their data and in particular to Bob Boas, Kirsty Lynn, Maddy Morton and John Ward for spending time to explain how the ENO works. We thank Luca Anderlini, Leonardo Felli, Julian Franks, Denis Gromb, Richard Portes, Randi Rosenblatt, Mitch Petersen, John Straub and participants at various conferences and seminars for helpful comments and suggestions. We thank John Pedersen and Andrea Pederzolli for research assistantship. We particularly thank Steve Matchin for giving us access to his data set on expenditure by postcode and Katy Graddy for her crucial contribution at the beginning of this project. The project was supported by an LBS Research Grant.

Abstract

We use a unique dataset from the English National Opera to study what motivates individuals to donate. The data includes both attendance and benefits (granted and consumed) by all donors. We find that individuals clearly respond to incentives. However, only some individuals are motivated exclusively by private benefits. Some individuals are willing to fund public goods, even though they could free-ride. Moreover, donors who attend special events or new productions develop loyalty and increase their donations over time. Finally, individuals are sensitive to social pressure and network connections. These results can help charities to refocus the design of their fund-raising.

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